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Germany Industry June 2018

Germany: Industrial production contracts in June, suggesting a weak finish to the second quarter

August 7, 2018

Industrial production contracted 0.9% in June over the previous month in seasonally-, price- and working-day adjusted terms, contrasting May’s downwardly revised, but still strong, 2.4% expansion (previously reported: +2.6% month-on-month). The print marked the fourth monthly production contraction in the first half of the year and reflected a steeper contraction in output than the 0.5% drop market analysts had expected.

The fall in output was driven by a significant loss of steam in the construction sector, which recorded a 3.2% contraction. This starkly contrasted May’s robust 2.5% expansion, which was the highest print since February last year. Meanwhile, manufacturing output dropped 0.8% in June, markedly below the previous month’s 2.6% increase. On a more positive note, output growth in the energy sector picked up pace to 3.0% in June from 0.8% in May, while the mining sector strongly rebounded from a 0.4% contraction in May to a 6.2% expansion in June.

Compared to the same month a year ago, growth in industrial production slowed from a revised 3.0% in May (previously reported: +3.1% year-on-year) to 2.5% in June. Lastly, annual average growth in industrial production was stable in June at May’s 3.8% figure.

Germany Industrial Production

Panelists polled by FocusEconomics expect industrial production to expand 2.7% in 2018, which is down 0.2 percentage points from last month’s forecast. For 2019, the panel sees industrial production increasing 2.3%.

Author:Jan Lammersen, Economist

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Despite more positive economic data towards the end of the second quarter, in July business sentiment continued to ease, with the Ifo Business Climate Index decreasing slightly to 101.7 points from 101.8 points in June.

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